The Importance Of Crisis Management

825 Words4 Pages
According to (Pearson & Clair, 1998), crisis management can be defined as a systematic effort by company members and external stakeholders to prevent crises or to efficiently manage the already occurred shock. Furthermore, effective crisis management should be grounded on four “C”: causes, consequences, caution, and coping. Causes encompass preceding conditions that triggered the crisis; consequences comprise a direct and long-term impact; cautions reveal a variety of undertaken means aspiring to avert or minimise the crisis adverse consequences; and coping embodies a range of measures in response to the occurred crisis. The conservative crisis management approach is built upon power, security, tradition, conformity, and achievement. This approach…show more content…
Therefore, the adaptive firms consider external shocks as a priority, secure long-term solutions, employ a vigilant scanning of the external environment, including output-related success factors, such as customer needs, demand growth, buyer power, and sales. This ensures management skills to mediate between the external and internal environments to tailor successfully a set of strategies (D´Aveni & MacMillan,…show more content…
Haveman (1993) alleges that companies of different scope have varied abilities to manage the crisis, while Ghobadian et al. (2008) do not find any correlation between the company’s size and its adaptive abilities during the crisis. Yasai-Ardekani & Nystrom (1996) affirm that large firms possess advantageous information about the external environment and wider network compared to smaller firms. This ensures the more extensive environmental scanning process by larger enterprises. Furthermore, while small businesses frequently encounter a lack of resources for urgent expansion and diversification, large corporations are constrained by their bureaucratic system, longer communication lines, and hierarchies that retard the speed of responses. Therefore, mid-sized companies are leaders of the effective and flexible adaptation to external shocks. Moreover, Ebben & Johnson (2005) highlight that the advantage of SMEs’ adaptation to crisis is grounded on its flexibility, proximity to the market, and absence of necessity to follow formal rules and strategies. On the contrary, Anderson & McAdam (2006) cognise that due to greater resources and experiences, large firms adapt better to external shocks compared with SMEs with less financial and human capacities. Furthermore, Haveman (1993) affirms that during the crises, large companies reap benefit from its slack human resources that can be
Open Document